Best Facebook Analyst Jobless Amid Kazakh Brokerage Cull

By Nariman Gizitdinov -
Jan 20, 2013

Five months after Forbes magazine
crowned Erlan Abdikarimov the best Facebook Inc. (FB)analyst, the
24-year-old Kazakh is out of a job as new rules in the Central
Asian country force boutique investment banks like his to close.

IFG Continent was driven out of business last year for
being unable to meet capital and trading-volume requirements
that came into force Jan. 1. It was among the seven brokerages
to shut in 2012, more than in the previous two years combined,
central bank data show.

Abdikarimov is one of an estimated 600 people who have
already lost or will lose their jobs as the number of Kazakh
brokerages is culled to about 10 from 44 at the start of 2012,
according to Orken Invest Jsc, one of the casualties.

“The conditions set out by the national bank for
continuing operations on the securities market were
unacceptable,” Orken Managing Director Damir Seisebayev said by
phone from Almaty, the Kazakh commercial capital. “We were
forced to give up a license that we received after five months
of trying with great difficulty.”

Abdikarimov, a mining specialist, said by phone from Almaty
that he was asked by clients for advice on Facebook last year as
the Menlo Park, California-based company was preparing its
public offering. After researching the social network and
becoming a member, he figured it was worth $24.62 a share, the
lowest among analysts tracked by Bloomberg at the time.

Facebook Plunge

When Facebook went public at $38 on May 17, Abdikarimov
recommended selling the stock, which plunged to as low as $17.55
on Sept. 4, data compiled by Bloomberg show. It declined 1.6
percent to $29.66 in New York on Jan. 18.

“It was sad because I had to give up on some of the
projects I started,” Abdikarimov said of losing his job.
“Smaller companies are more open to innovative ideas than
bigger ones.”

Kazakh regulators said they’re concerned with strengthening
the country’s markets before joining the World Trade
Organization, which could lead to an influx of capital.
Kazakhstan, which holds about 3 percent of the world’s oil and
is the largest uranium supplier, expects to join the global
trade arbiter by the end of the year.

The country of more than 16 million people is also
embarking on the biggest sale of state assets since it won
independence two decades ago. Its People’s IPO program will
spur demand for financial services and generate a windfall in
commissions for the few brokerages left, Orken’s Seisebayev said.

People’s IPO

“An unprecedented number of investors,” about 34,000,
took part in the first offering, last month’s sale of about 10
percent of pipeline operator KazTransOil (KZTO) for 28 billion tenge
($186 million), Seisebayev said.

Central bank Chairman Grigori Marchenko said the new
regulations are aimed at strengthening the best brokerages and
better preparing them to compete with foreign banks, the Kursiv
newspaper reported in February. The amount of its own money a
brokerage must have on hand to cover potential losses almost
tripled to 692 million tenge.

“This decision was adopted with the aim of stimulating the
domestic stock market,” Elena Nikiforova, head of the central
bank’s financial oversight department, said by e-mail. “The
changes will create additional opportunities for domestic
brokerages to conduct business.”

“The regulator has decided to undertake measures to
revitalize the sector of broker services, which we welcome,”
Halyk Finance Chief Executive Officer Yerkebulan Tulibergenov
said by e-mail. “The new requirements will allow the regulator
to focus on a smaller number of players.”

Abdikarimov said that without employment offers on the
table he’s left to ponder his professional future.

“I remain without a job,” he said. “The regulator’s
actions have forced many players to quit the market, including
my company.”